Recurring Deposit (RD) Calculator
An RD calculator helps you estimate the maturity value of a recurring deposit, where a fixed amount is deposited every month for a chosen period. Along with the final maturity value, the calculator also shows the total amount deposited and the total interest earned over time.
Unlike a fixed deposit, where the entire amount is invested at once, an RD builds gradually through monthly contributions. Each deposit earns interest for a different length of time, which is why RD calculations are slightly more involved than lump-sum investments.
How the Calculation Works
In a recurring deposit, every monthly contribution earns interest from the time it is deposited until maturity. Earlier deposits earn interest for longer, while later deposits earn interest for a shorter duration.
Banks usually quote an annual interest rate with a specific compounding frequency, commonly quarterly in India. To calculate RD returns accurately, this nominal annual rate is first converted into an effective monthly rate. Monthly deposits are then treated as being made at the beginning of each month, which is the standard convention followed by most banks.
- Monthly deposits are assumed to be made at the start of the month
- Annual rate is converted to an effective monthly rate
- Interest compounds based on the selected frequency
- Taxes and bank-specific charges are excluded
Inputs and Options Explained
The calculator uses inputs that closely reflect how recurring deposits are structured in practice.
- Monthly RD Deposit — The fixed amount you deposit every month. This remains constant throughout the RD tenure.
- Annual Interest Rate (%) — The nominal rate offered by the bank, assumed to remain unchanged during the deposit period.
- RD Tenure — The total duration of the RD. You can enter this in years or months.
- Compounding Frequency — How often interest is compounded. Most Indian banks use quarterly compounding for RDs.
Examples and Edge Cases
Two RDs with the same monthly deposit and tenure can still produce different maturity values if their interest rates or compounding frequencies differ. Even a small change in rate can have a noticeable impact over longer tenures.
If the interest rate is zero, the maturity value is simply the sum of all monthly deposits. In such cases, the calculator clearly reflects that no interest has been earned.
Who Should Use This Tool
This calculator is useful for anyone planning or evaluating a recurring deposit under standard banking conventions.
- Individuals planning disciplined monthly savings
- Investors comparing RD tenures and interest rates
- Anyone validating maturity values provided by banks
Related Concepts
Recurring deposits combine elements of regular investing and compound interest, and are often compared with other savings instruments.
- Annuity — A series of regular payments made over time, which forms the basis of RD calculations.
- Compounding — The process where earned interest generates further interest.
- Maturity Value — The total amount received at the end of the RD tenure.
To compare RD outcomes with one-time deposits, you can also use an FD Calculator or a SIP Calculator.